Editing Economic interdependence (section)

=== Hierarchical Network Approach ===

This approach is based on the precept that [[Globalization|globalisation]] increases the integration and interdependence between the economy of different countries. The Hierarchical Network Approach is used to measure economic interdependence by analysing growth clusters and cross-country liaison, and business cycle synchronisations. The cross-country liaison or economic interaction between countries or states is most commonly measured by Pearson's cross-correlation coefficient.<ref name=":1">{{Cite journal|title = Measuring Global Economic Interdependence: A Hierarchical Network Approach|journal = The World Economy|date = 2013|issn = 1467-9701|pages = 1632–1648|volume = 36|issue = 12|doi = 10.1111/twec.12080|first1 = David Matesanz|last1 = Gomez|first2 = Benno|last2 = Torgler|first3 = Guillermo J.|last3 = Ortega|hdl = 11336/28749|s2cid = 153947881|url = https://eprints.qut.edu.au/65628/2/65628Figures.pdf|access-date = 2019-12-10|archive-date = 2020-05-05|archive-url = https://web.archive.org/web/20200505094342/https://eprints.qut.edu.au/65628/2/65628Figures.pdf|url-status = dead}}</ref> The correlation matrix is a methodical method which exhibits the mutual relationship of countries over a specified time period.<ref>{{Cite journal|title = Hierarchical structure in financial markets|journal = The European Physical Journal B|date = 2012|issn = 1434-6028|pages = 193–197|volume = 11|issue = 1|doi = 10.1007/s100510050929|first = R. N.|last = Mantegna|arxiv = cond-mat/9802256|bibcode = 1999EPJB...11..193M|s2cid = 16976422}}</ref> To measure growth clusters, economists need to get hold and analyse changes in GDP for each country over a specified period of time. The relationship between interdependence and business cycles is calculated by the distance correlation matrices over a period of 10 years. The combination of results from the data presents the economic interdependence of countries over time. By this measure, trends from the data has shown that the degree of world economic interdependence is growing due to globalisation.<ref name=":1" />